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Porter’s Diamond Model

Submitted By Krishnaswamy R (15) ArjunraoBhoj (19) Saeed Attar (06) Kazim Abbas (11) Manish Kaul (10) NomanShaikh (26)

. related industries. suppliers. Traditional country advantages Traditionally. energy) 4. Labor 5. this fits in a rather passive (inherited) view regarding national economic opportunity. Natural resources (minerals. Abundance of such factors may actually undermine competitive advantage! He introduces a concept called "clusters" or groups of interconnected firms.The Diamond Model of Michael Porter for the competitive advantage of Nations offers a model that can help understand the comparative position of a nation in global competition. Because these 5 factors can hardly be influenced. economic theory mentions the following factors for comparative advantage for regions or countries: 1.Local population size. Location 3. Porter says that sustained industrial growth has hardly ever been built on above mentioned basic inherited factors. and institutions that arise in certain locations. The model can also be used for major geographic regions. Land 2.

-local rivalry forces firm to move beyond basic advantages. PORTERused a diamond shaped diagram as a basis of a frameworkto illustrate the determinants of national advantage. -these factors are upgraded / deployed over time to meetthe demand. THE ROLE OF THE GOVERNMENT IN THIS MODEL -to encourage -to stimulate -to help to create growth in industries. as a rule competitive advantage of nations is the outcome of 4 interlinked advanced factors and activities in and between companies in these clusters. a strong technology and knowledge base. These can be influenced in a pro-active way by government. PORTER argued that a nation can create new advanced factorendowments such as skilled labor.. -it is a self-reinforcing system. The points of the diamond are described as follows 1.FIRM STRATEGY. The diamond represents the national playing field that the countries establish for their industries. STRUCTURE AND RIVALRY -local conditions affect firm strategy. 4. -local disadvantages force innovations. government support. THE DIAMOND AS A SYSTEM -the effect of one point depends on the others.Porter Diamond Nations According to Porter. FACTOR CONDITIONS -a country creates its own important factors such as skilledresources and technological base.DEMAND CONDITIONS -a more demanding local market leads to national advantage. . -this also puts pressure on local suppliers to lift their game. and culture. 3. new methods and hence comparative advantage. -a strong trend setting local market helps local firms anticipate global trends. 2.RELATED AND SUPPORTING INDUSTRIES -local competition creates innovations and cost effectiveness.

Demand Conditions . . .The government extends full support to industry through reform processes. 4.Many telecom and equipment and software companies are based in India. 3. Factor Conditions .Telecom Industry 1.Intensive competition in the country has made it possible for service providers to offer the services with lowers fare in the world.Competent handset manufacturers have produced the lowest priced handsets for the Indian market.Growing affordability and lifetime free schemes have care a market at the bottom of the pyramid. .Rapidly developing robust telecom infrastructure. profitability. 2. Government . . as well as those of consumers. Firm Strategy.Presence of skilled labour pool. Structure and Rivalry . .India has a large middle class of 300 million. .Increasing disposable income of consumers.Handset players are setting up manufacturing bases in India for better operation management.Policies are in place to safeguard the interests of service providers.Increasing demand due to changing lifestyles and growing attraction for mobiles with new features.Many new handset have been launched.Low tele-density (~18%) offers huge future potential. . . Related and Supporting Industries . . .

Many firms both small and large ones. Structure and Rivalry . . .Spendable income has increased amongst the people within the country. hospitality industry.Tourism industry is closely allied with other industries like transportation.Tourism firms and hotels are mainly concentrated on demands ofboth the local and foreign tourists. 3. Related and Supporting Industries . recreational activities.These related industries are growing in and is responsible for creating many job opportunities and also providing service to the tourists.India has lot of man power and skilled labours.Hotels are more competitive and rivalry among them is more apparent. etc. . 4. .Also to take some time off from their busy schedule. 2. people have started travelling to holiday destinations.Small capital investment. . scientific and technological infrastructure. Government . and people travel to holiday destination taking their family and friends.Tourism Industry 1. .Main strategy: Low price competition and market segment penetration. Demand Conditions .Administrative. Firm Strategy. . Chance It includes exchange rate speculations and terrorism which has an impact on the Tourism of India.The geography of India is big and it has a variety of places known for its historical monuments and also for its wildlife. . . Factor Conditions .The local state governments are taking steps to improve their state tourism by identifying those places to which tourist often visit and improving its infrastructure.